Five mid-Atlantic farm cooperative banks, including three in Maryland, announced plans yesterday to merge next year in a move that would form the largest agricultural lender in the region.
The five banking cooperatives -- known officially as associations -- are affiliated with AgFirst Farm Credit Bank, the Columbia, S.C., cooperative formed as a result of the 1995 merger of Farm Credit Bank of Baltimore and Farm Credit Bank of Columbia.
Ronald L. Byrd, chief executive officer of Central Maryland Farm Credit, one of the five associations involved in the merger, said the directors of each institution have agreed on a letter of intent to merge, "but it's not a done deal."
Stockholders, who also are the cooperatives' borrowers, are scheduled to vote on the proposed merger in May 2000, Byrd said.
If approved, the consolidation would take effect July 1, 2000.
The four other associations involved are:
Chesapeake Farm Credit of Denton; Delaware Farm Credit of Dover; Keystone Farm Credit of Lancaster, Pa.; and Marva Farm Credit of Salisbury.
The new bank is to be headquartered in Westminster and would have assets exceeding $1 billion.
An advantage of the merger, Byrd said, is that the bank would diversify its lending so that the majority of loans are not made to a single segment of agriculture.
He also said the merger would cut costs and eliminate about 30 of 50 administrative positions at the five lenders.
"Instead of five CEOs, we would have one," he said. The same would apply to other positions, including chief financial officer and chief loan officer.
The banks employ 175 workers.
The new bank would make loans in Maryland, Delaware, Pennsylvania and Virginia.
As cooperatives, the banks return a percentage of their profits each year to borrowers.
Pub Date: 6/04/99